Defined
What Is GMFV (Guaranteed Minimum Future Value)?
GMFV (Guaranteed Minimum Future Value) is the amount the lender guarantees your car will be worth at the end of a PCP. It's the balloon you pay only if you want to keep the car.
The GMFV is set at the very start of a PCP, based on the car's price, your agreed mileage and how long the deal runs. It's the lender's promise of the car's minimum value at the end — and the lump sum you'd pay to own it.
How the GMFV works
The GMFV is the part of the car's value you don't pay off during the term — so your monthly payments only cover the depreciation in between. That's why PCP monthly payments are lower than HP.
Because the lender guarantees this figure, you can hand the car back at the end and owe nothing more, as long as you've stayed within the mileage and condition terms. If the car is worth more than the GMFV, that difference is your equity to put towards your next car.
A worked example
On a £20,000 car with a £8,000 GMFV, you finance roughly the £12,000 of depreciation across the term, then choose whether to pay the £8,000 to keep it.
Worked example
Frequently asked
Is the GMFV the same as the balloon payment?
Do I have to pay the GMFV?
Who decides the GMFV?
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